The firms of the future

“Does the future belong to virtual law firms?” That question was posed by an American Lawyer article earlier this week that focused on Virtual Law Partners, a growing firm nominally based in Silicon Valley but in fact operating, well, wherever its lawyers are. Virtual firms — two others, FSB Legal Counsel and Rimon Law Group, are also cited — consist of partners who operate independently, charging rates well below what they would require were they (still) at large firms and profiting by the huge savings in overhead and other costs.

The lawyers operate remotely, but they tap into a larger infrastructure with centralized billing, IT support, marketing, and recruiting efforts. They also share work frequently, communicating through video chat or e-mail as needed. Technology companies and startups were early converts, but the firms have added lawyers with varying expertise, including employment, real estate; FSB has even started a litigation practice.

Answering the article’s eponymous question in the negative was Patrick J. Lamb, who operates a bricks-and-mortar but nonetheless highly innovative firm at Valorem Law. He suggests that virtual firms suffer by comparison to boutiques thanks to one key difference.

The difference?  The ability to aggressively collaborate. Even with the best communication hardware, there is something lost when you can’t go next door and bounce ideas off someone who may have nothing to do with the case but who is vested in its outcome. I’ve experience firsthand the accelerated evolution of ideas from really good to extraordinary when several experienced minds combine their talent and judgment and work through a problem.

Speaking for myself, it’s not clear to me how a partner in a virtual law firm differs meaningfully from a well-connected high-tech sole practitioner. Both run their own practices in a highly personalized and streamlined environment, often rely on cloud-based infrastructure to manage their practices, set their own rules for client relationships, and operate with an unusual degree of autonomy. I think virtual firms aren’t cyberspace versions of traditional law firms so much as they’re loose aggregations of like-minded solos under a common banner that happens to be hung on the internet.

So I don’t think virtual firms are the future. But I do think they’re a future. More specifically, they’re one of a growing number of law firm models that will all be able to flourish in the next couple of decades. That’s because what we’re really seeing here is the demise of the traditional cookie-cutter law firm as the default setting for legal service enterprises.

One of the great things about the current upheaval in the legal marketplace is that the old expectations and parameters of law firms are losing their iron grip on the profession. Look, for example, at FutureFirm 1.0, a two-day competition this past April to take a tired traditional law firm called Marbury Madison LLP and overhaul it for the 21st century. Hosted by Prof. William Henderson at the University of Indiana Maurer Faculty of Law, FutureFirms attracted some of the most innovative minds in practice, the corporate world and academia. The event produced a blueprint for redefining large law firms that includes alternative fees, merit-based compensation and risk-sharing with clients — and they’ll do it again next year.

Or take a look at a forthcoming article in the CBA’s National magazine (which, full disclosure, I edit) titled “2020 Vision,” written by lawyer and Legal Post blogger Mitch Kowalski. It looks back from the year 2020 at the development of a very different (and hugely successful) law firm called BFC Law Professional Corporation that abandoned most of the trappings of the traditional firm. Of particular note for our purposes is the future firm’s “hub-and-spoke” approach to its physical premises:

The Hub
We maintain meeting room space downtown (the Hub), equipped with staff, computers and the like. This space also contains hoteling niches where lawyers have workspace and telephone/internet access. Remember, all our systems are cloud-based, so lawyers and staff can work anywhere. Office management handles all boardroom and hoteling niche bookings.

The Spoke
BFC’s day-to-day legal work is done at a public transit-accessible location outside the downtown core (the Spoke). Not only is rent much cheaper there, our staff and lawyers find the Spoke to be closer to their homes,  which reduces their travel time and increases their quality of life. In the Spoke, we have moved away from separate offices for lawyers,  which allows for the efficient use of smaller rentable space with better HVAC flow (further reducing costs). Small meeting rooms throughout the Spoke accommodate privacy as needed.

What the virtual law firm, Marbury Madison, and BFC Law all have in common is that they’re different and quite realistic visions of how lawyers can come together to offer legal services to the marketplace. They reject, or at least test severely, the standing assumptions about how a law firm should be constructed, both physically in terms of its premises and organizationally in terms of its clients and employees. In doing so, they reflect our evolving understanding within the profession of just what a law firm is supposed to look like.

We have this funny little idea in the law that the nature of your work and the quality of your practice are heavily influenced by the physical environment in which you operate. Are you on the 40th floor of a steel and glass tower in an urban center? You must be doing intricate, high-end, bespoke work for multinational clients. Are you in a nice but inconspicuous brick building with a wooden front door and creaky floorboards in an exurban community? You must be doing basic, commoditized work for unsophisticated clients. Lawyers love to judge people, and the people we love judging the most are each other, using criteria that reveal more about our own assumptions and biases than anything else. What the rise of the virtual law firm really signifies is that those assumptions, at least in terms of law firm structure, should soon be fading away.

In fact, if the form that a law firm takes will be influenced by anyone, it’s going to be clients, not lawyers. Both clients and lawyers — but especially lawyers — are very used to the idea that “they” come to see “us” in a place and at a time of our choosing. That simple unconscious assumption sets the tone for all relations that follow between the two parties. Lawyers have always had home-field advantage over clients, and we like it that way.

Now, the gravitational pull is starting to run the other way. As clients’ influence grows, so too will their ability to draw us to them, rather than vice versa. That doesn’t have to mean house calls — although it might — but it does mean that law firms will feel more obliged to arrange their physical availability in ways that increase convenience to clients. “Lawyers on demand,” a little like time-shifted TV shows? It’s not a preposterous result, and even thinking about it prepares us to better adjust to future client relationships where we don’t get to set all the ground rules from the start.

Yesterday’s law firm selection was a boxed lunch packed by lawyers; tomorrow’s is going to be a lavish buffet with clients standing in line next to you while you choose. For all that we still need to work on diversity within law firms, it’s going to be nice to have a little diversity of law firms as well.

Free and the GP

Like Thomas Friedman and Malcolm Gladwell before him, Chris Anderson is becoming known for books that identify and name an evolving trend that connects business and society. You’ve probably read or head about his newest book Free: the Future of a Radical Price. It’s generating a tremendous amount of heat around the idea that the cost of many things is heading towards zero and the price of those things is following. Reviews from established providers have ranged from mixed (The New York Times and The Economist, to name two) to devastating (Gladwell himself in The New Yorker), while reaction from the blogosphere and Twitterati has, not surprisingly, been far more positive.

I try not to talk about books I haven’t read, and Free is still on my to-get list. But I did read the lengthy excerpt published in Anderson’s magazine Wired last February, and it seems to capture the book’s arguments nicely (and for free, no less). The gist is that technological advances have made the cost of creating one more copy of many products (the marginal cost) and the cost of distributing those products so small that they are effectively zero. Content that can be rendered digitally (almost all of it) is accordingly “too cheap to meter,” which in any kind of open marketplace means that competition will cut the price of those products to virtually nothing.

Of course, not everything falls into this category: products like shoes and TVs aren’t heading towards free. And even for products whose marginal costs are nearly nothing, that’s not the end of the story, as the Times review notes:

More precisely, the marginal cost of digital products, or the cost of delivering one additional copy, is approaching zero. The fixed cost of producing the first copy, however, may be as high as ever. All those servers and transmission lines, as cheap as they may be per gigabyte, require large initial investments. The articles still have to be written, the songs recorded, the movies made. The crucial business question, then, is how you cover those fixed costs. As many an airline bankruptcy demonstrates, it can be extremely hard to survive in a business with high fixed costs, low marginal costs and relatively easy entry. As long as serving one new customer costs next to nothing, the competition to attract as many customers as possible will drive prices toward zero. And zero doesn’t pay the bills.

Interesting as all this is, what does it have to do with the legal profession? Potentially, a great deal, as some legal bloggers have noted. Carolyn Elefant and Doug Cornelius both point to innovative new offerings from two well-known US law firms: Wilson Sonsini has set up an online term sheet generator, while Orrick has created a start-up forms library on its website. Both of these products (or are they services?) are entirely free, to anyone (client, non-client, other lawyer) who wants to use them. They’re also products from which these firms and others have traditionally made money. “But there’s a method to Orrick’s apparent madness,” Carolyn writes:

Orrick’s freebies help it capture a segment of the market which either couldn’t afford to hire Orrick or if they could, would not have  been worth Orrick’s time.  Consider the example of a small business — typically the type of client outside of biglaw’s demographic.   The business might download and fill in Orrick’s incorporation form and then say to itself “I’ve already filled out the data.  How much could it cost to pay an Orrick attorney to look this over?”  Likewise, Orrick could charge far less to eyeball a completed form which it prepared itself than if the firm were to begin the incorporation from scratch (in which case, it would have to invite the client to the office, interview the client, gather the data and prepare the incorporation papers).

Meanwhile, Doug points out that many law firms have already adopted the philosophy of Free, in their own law firm newsletters and “client alerts”:

When you had to mail these alerts, there was a dollar cost associated with that distribution. To better phrase that, there was a stamp cost associated with distribution. Now distribution are costs are minimal. The costs are the same whether you email it to 500 people or 50,000 people. The same is true with viewing it on the law firm’s website. … Lawyers and their firms are giving away this valuable legal insight in the hopes that you will hire them to represent you in a matter related to the information in their publication. They use the publications to showcase their expertise, but in the process give away some of their substantive knowledge.

Giving away something for free or ultra-cheap in hopes you’ll entice users to buy your other services is not a new phenomenon, even in law: smaller firms have been using items like wills as “loss leaders” for years. What’s significant here is what’s being given away.

Legal forms aren’t matchbooks or Bic pens — or at least, they didn’t use to be: they were once important elements of the lawyer’s inventory that required a lawyer’s skills. The fact that they’re now customizable and downloadable on the Net tells us that the skill to produce them is now available widely. That implies a lack of scarcity and a consequent inability to charge much of a price. Legal knowledge, as Doug points out, is already being given away free by law firms; now, it appears that legal processes like document creation are following suit.

But it’s not law firms like Wilson and Orrick leading the charge and blazing this trial; it’s non-lawyer entities. Companies like LegalZoom sell forms for low prices; start-ups like WhichDraft give them away for free; most tellingly of all, services like JD Supra encourage lawyers to donate them to the profession at large as, among other things, a marketing tool. “Lawyers need to recognize,” Carolyn notes, “that we are fast reaching a point where the kinds of forms that companies like LegalZoom offer – such as contracts, leases, incorporations and wills – may be available online to all for free.”

Lawyers’ marginal cost of document preparation has always been low, but in the absence of other alternatives for clients, document-focused products could be sold at a profit. Now, thanks to the Free effect, the marketplace value of these sorts of products — their price, in other words — reflects their marginal cost. That’s great for clients; it’s bad for a lot of lawyers. Specifically, it’s terrible news for lawyers whose practices depend on the creation and sale of documents, contracts, agreements and anything else that can be digitized, templated and algorithmed. In other words, for many general practitioners.

Think of the services your typical general practitioner provides: wills, incorporations, divorce papers, leases, standard contracts and so on. If all these things aren’t yet available for little or for nothing on the web, they soon will be. How will the lawyers who rely on this kind of work survive? If they can offer more in-depth services in a given area, they could give away the documents in hopes of attracting that higher-end paying work. Jay Flesichman explains:

Would you prepare the divorce paperwork if you could make the money in another fashion? Say, on a new estate plan for the client? Would you draft bankruptcy petitions at no cost if it would cause the client to pay you for post-petition services and give you the chance to handle all of the lucrative fee-shifting adversary proceedings that come out of the bankruptcy case? … [In bankruptcy,] the consultation is often free as a way to get the prospect in the door.  Maybe the credit report is free.  Perhaps credit counseling is built into the price, making it free.  But not much else.

The thing of it is, though, if you could provide these in-depth services, by definition you wouldn’t be a general practitioner. That’s why the future for GPs looks incredibly grim: there’s just no profit to be had in providing a wide range of basic legal services. And I’m not talking just or even exclusively about solos: urban office towers are filled with lawyers whose working days are spent creating and reviewing corporate forms and documents. They might be exquisitely complicated forms. They might involve huge sums of money. But they’re still forms and documents, and if the wave of this kind of work heading to India wasn’t a big enough clue as to its marketplace value, the people at Wilson Sonsini and Orrick are making it crystal clear.

Inevitably, the term “commoditization” is going to enter this conversation, and Jay Parkhill makes the connection from Free to Richard Susskind. In The End of Lawyers?, Richard is careful to mark five stops on the route from bespoke to commoditized work, including standardized, systematized and packaged work. For legal tasks, he wrote, a commodity is “an IT-based offering that is undifferentiated in the marketplace (undifferentiated in the minds of the recipients and not the providers of the service). For any given commodity, there may be very similar competitor products, or the product is so commonplace that it is distributed at low or no cost.” We seem to have reached the point where legal document work is becoming entrenched in the packaged and commoditized areas.

What this all comes down to is this: if your main source of value is your ability to craft a legal document — if you rely heavily on products with a very low marginal cost — you could be in serious trouble. And it may only have begun: recall the NYT review of Free that noted: it can be extremely hard to survive in a business with high fixed costs, low marginal costs and relatively easy entry.

Law firms have traditionally had high fixed costs — expensive lawyers and prime real estate, principally. Many practice areas have low marginal costs — once you’ve drawn up a prospectus for one client, you’re 70% of the way to drawing one up for the next one. What’s missing from the equation is the relatively easy entry: lawyers still decide who can offer legal services, and we prosecute for the unauthorized practice of law those whom we decide can’t. If that barrier ever falls, look out.

The new leverage

Bad news on the economic front continues to pile up — you don’t need the links from me — and the legal profession is finding its ride increasingly bumpy as a result. Wachovia’s legal specialty group reports that partners in large law firms are bringing in less revenue for the first time since approximately the Industrial Revolution. But it also points out an overlooked fact: despite all the talk about associate layoffs, it’s staff that’re really taking the hit at firms, down 18% in September alone. That suggests a couple of things: that some firms really are taking steps to retrain or otherwise hold onto their associates (and there’s good reason to do so, says Bruce MacEwen), but also that these firms aren’t looking as far down the road as maybe they should.

Looking down that road are the good people at The American Lawyer and Legal OnRamp who, with the assistance of consultant Rees Morrison, recently conducted a survey of in-house counsel members of Legal OnRamp. The survey (disclosure: I made small contributions during the design process) asked in-house lawyers about their relationships with outside counsel and their predictions about how those relationships and in-house practices will evolve over the next five years. Topics of inquiry included client satisfaction surveys, value billing, outsourcing, commoditization, automation, consolidation, and social networking.

The thrust of the results is that in-house lawyers aren’t especially happy with outside counsel in terms of service, partnering and communication — nothing new there — but are surprisingly tentative about predicting major change in how they go about acquiring services from these law firms. Very surprising, actually, as Michael Grodhaus says in reference to another study “in which 32% of 600 corporate executives predicted significant changes in law firm billing practices over the next two years. … So in the face of what is likely to be the worst financial crisis in this country since the 1981-82 recession — two-thirds of these corporate executives expect to continue to be billed by the hour for legal services just as they have always been? Where are their shareholders?”

The AmLaw/OnRamp survey results are here, the analysis by Rees and AmLaw’s Aric Press  is here, and Paul Lippe’s analysis at Legal OnRamp is here (members-only on that last one). All insightful stuff, and worth your time. For me, though, the takeaway is found in Aric’s introductory AmLaw editorial, summing up the big-picture view of the changes underway in the legal services marketplace. He identifies, correctly I think, four trends driving change — client pushback, talent upheaval, technological disruption and the Legal Services Act — and forecasts both fundamental change (farther down the line) and disaggregation of legal services (probably a lot sooner) to come. He closes with this concise but powerful state-of-the-nation on change in the legal marketplace (emphasis added): Continue Reading

We are all solos

Law firms ask a lot from their lawyers: work hard for long hours, respond immediately to clients and colleagues, accept and promote the firm’s culture, support overall firm profitability, and so forth. But law firms give a lot back, too: steady income and predictable bonuses, centralized resources, shared overhead costs, exposure to clients, and general collegiality, to name a few.

But the most essential thing law firms do for their lawyers is to share their brand — to give their lawyers the boost in personal prestige and profile that comes with being associated with a respected name and identity. Set aside all the recruitment and retention pitches — the overriding reason why lawyers stay with a firm for the medium-term or beyond is that the firm’s brand evokes confidence, lends legitimacy, and enhances the lawyer’s personal brand. (For an example of what happens when a firm’s brand collapses, watch the unhappy tale unfolding at Heller Ehrman).

That, at least, has been the traditional way things have gone. More recently, though, in the age of the lateral hire, we’ve seen firms acquire lawyers in the hopes that the lawyer’s personal brand and reputation will reinforce or even enhance the firm’s brand. We’ve also seen the rise of lawyer free agency — rapid lateral movement among firms by lawyers at all career stages, such that it gets harder for firms to base their brands on individual lawyers or practice groups. Most importantly, the combination of associate fungibility, hard economic times and partners’ determination to protect PEP at all costs has resulted in recurring waves of lawyer layoffs, making an indelible impression on lawyers that loyalty to employees is not a law firm characteristic.

These and other phenomena mark the rising importance and influence over the last decade of the lawyer’s personal brand, something that was once foreign to all but a very few outstanding practitioners. Individual lawyers have less need to be associated with a law firm’s brand, at least beyond the first couple of years of practice, because they have become more adept at fashioning their own reputations and taking charge of their own careers. Continue Reading

How David beat Goliath

Reading to my three-year-old from her new book Bible Stories for Toddlers last night, I was struck by something about the story of David and Goliath that I hadn’t fully appreciated before. David is often held up as a symbol of bravery in the face of insurmountable odds, as well as the power of divine protection. But it struck me that courage and righteousness aside, young David was no fool: he didn’t engage a gigantic opponent in hand-to-hand combat. He kept his distance, picked up a sling and stone, and took out a heavily armed warrior with missile fire. David was one of history’s earliest recorded asymmetric fighters.

There’s a lesson here for lawyers who work in smaller operations, from midsize firms all the way down to sole practices: taking on your bigger competitors on their terms is a losing strategy. Either avoid their strengths or capitalize on their weaknesses, but at all times remember that you can’t do business the way they do and you shouldn’t try. Recent news items offer three examples that bear this out:

1. Technology: The 2008 ABA Legal Technology Survey Report sent out some highlights in a press release, including this one: 37% of respondents use case or practice management software. But what’s interesting is that smaller firms have better uptake: 24% of large-firm lawyers use the software, versus 33% at firms with 10-49 lawyers, 50% of respondents from firms of 2-9 attorneys and 40% of solos. If you’re in a small practice, you absolutely must capitalize on big firms’ unwillingness to adopt these programs, which pay for themselves almost immediately in terms of increased productivity and efficiency. Biglaw’s failure in this regard is a gift to its smaller rivals, one that won’t last forever.

2. Receivables: The Daily Business Review reports on a raft of firms that, in the face of a weakening economy, are cracking down on overdue receivables and getting their cash flow pumping harder. Firms could ignore outstanding bills when times were good, but now they’re motivated to collect those debts — or at least, judging from the article, the midsize and smaller ones are: the only large firm in the story says it “touch[es] base periodically” with clients whose lack of payment suggests the firm has “fallen off their radar screen.” Small firms can and must take cash flow seriously, because it adds an extra layer of profitability that some larger firms still feel, for some reason, they can ignore.

3. Exclusivity. Your ABA reports on a session at its annual meeting in New York on how solos can get referrals from large firms. The critical feature, as is always the case for smaller practices, is focus: develop a specialized niche that offers a complementary, not competing, profile to firms that could send you work. True enough, but the greater point is that large firms seek to be as many things as possible to as many clients as possible. You need to do the opposite: be very few things to a limited selection of people, so that you can own that cross-sectioned block of work and clients. Large firms think constantly about their fellow big-firm competition; your goal should be to have as little competition as possible.

Taking an asymmetric approach to strategy allows you to think of other big-firm weaknesses that you can turn into small-firm strengths:

* Overhead: One of the two biggest expenses for large firms, which feel compelled to occupy tony premises in expensive locations, can be a competitive advantage for you. Take steps to reduce your real-world footprint by going wireless and mobile, accessing caselaw and precedents online, sharing office space, or working from home or outside urban centers.

* Payroll: Here’s the other major expense for your huge competitors, whose business models assign many highly paid young lawyers tasks that have them punching below their intellectual weight. Hire experienced lawyers on contract, or let them work from home, and try to send at least some work offshore every month. The big firms have made salary a weakness for you by driving up market prices, so compensate by offering the flexibility and satisfaction that they can’t. Which brings us to:

* Women: Large firms’ inability to retain women past their sixth year of call is well-known, thanks to an economic model that pretends women don’t carry a disproportionate amount of child and home responsibilities. Women lawyers are an undertapped source of talent, a Moneyball-esque market inefficiency. Take advantage: find out what women lawyers are looking for in a legal employer and shape your workspace accordingly.

You can adjust and add to this list based on your own community, practice area, talent pool and client marketplace. What it comes down to is: don’t try transplanting a large firm’s business model to your more modest tract of land. Identify your bigger rivals, figure out their vulnerabilities, and make the appropriate changes to your own smaller firm’s profile.

But one final note of caution; beware of focusing too much on your competitors and not enough on your own strengths and vision. David was smart enough to use a sling and stone against a giant. But he was also adept enough with that weapon to take the giant down with one shot.

Book review: Solo by Choice

This is the first in what I hope will be a more than occasional foray into book reviews at Law21. There are so many good titles out there now that deal with law practice issues in an innovative way that I’d like to bring some of them to your attention. I have a few more books lined up to review over the next several weeks, but please drop me a line if you have any other suggestions for future reviews.

Solo by Choice: How to Be the Lawyer You Always Wanted to Be, by Carolyn Elefant (Seattle, Decision Books, 2008 )

If you’re even vaguely familiar with the legal blogosphere, you’ll know about Carolyn Elefant, a sole practitioner in Washington, D.C., who authors the MyShingle blog and is widely regarded as a leading spokesperson for and authority on solos and small-firm lawyer issues. Solo by Choice is her first book, a detailed compendium of advice, instruction and encouragement for sole practitioners that’s already destined to become just as much, if not more, a touchstone for the sole practice bar as the ABA’s Flying Solo.

Carolyn is an advocate for solo life and makes no bones about it: the book opens with six reasons to start your own practice and makes clear the author’s intent to defeat negative stereotypes of sole practice. But she’s equally clear that soloing isn’t for everyone, and the opening exhilaration of the promise of sole practice is tempered with a sober assessment of the demands of this type of career, especially straight out of law school. Carolyn supports solo practice, but won’t be zealous about it to the point of underselling its challenges or misdirecting lawyers into this line of work who don’t belong there.

In 250 pages (plus 50 pages of appendices), Solo by Choice covers every aspect of sole practice, from making the gut-wrenching decision to hang your own shingle to meeting the financial and client-relations demands of a sole practice. There is not an ounce of fat in this book: it is lean, powerful, tightly written and economical. Carolyn tells you everything you need to know about life as a solo and not a word more, making it the rare text that is both comprehensive and readable: her blogging background is evident in the concise style. Continue Reading

Takeaways from TECHSHOW

The kid is back from the candy store known as ABA TECHSHOW. This was my first trip in two years, and probably the best of the shows I’ve attended so far. I met up with old friends, made some new ones, and managed to avoid most of the St. Patrick’s Day revellers at the Chicago Hilton, so altogether it was a great success.

I loaded up on numerous sessions and gathered a ton of material that will be making its way into National and onto CBA PracticeLink in the coming weeks and months. But I thought you might be interested in a few highlights of the seminars I attended and what I took away from them. (Note that the “takeaway” isn’t necessarily the presenters’ position, but rather is my impression of where things are and where they’re headed in the future.)

* Privacy on the Internet, a keynote by Marc Rotenberg, Executive Director of the Electronic Privacy Information Center. Marc’s address was both entertaining (he opened with a discussion of the Eliot Spitzer case) and sobering (the amount of data about us that both government and the private sector are collecting is astounding).

Takeaway: Google is amassing the greatest collection of data in history and the tools to do some disturbing things with it, and all we have to reassure us is their word that they won’t misuse it. But we’re at the stage now where we need to be asking exactly who owns “information” of various kinds. For example, we worry that Google can track and keep everything we do online, including things we searched for and found. But much of this data would never have existed in the first place if not for Google: information that we consider our private business exists only because we voluntarily use Google’s services. Can we rightly lay claim to it? Isn’t it the consideration we chose to render Google in exchange for free search? As both privacy and anonymity become harder to maintain, we need to think a whole lot more about this. Continue Reading

Virtually legal

I’ve just assigned a feature article for the April/May 2008 issue of National that aims to explore the future of the sole practitioner. As I noted in a previous post, I’m worried about the near-term prospects for solos, especially in smaller centers, but I’m bullish on their chances down the road, so long as they’re willing to rethink their business models and invest in technology and innovation. Two recent articles make me think that the brighter future for smaller practices might arrive sooner than anticipated.

Stephanie Kimbro is a North Carolina solo who operates a virtual law office. In a guest post at Susan Cartier Liebel’s Build A Solo Practice LLC blog, Kimbro describes her wholly web-based practice: no physical office quarters, secure personal home pages for clients, and a state-wide client base that can access its files 24/7. She provides unbundled services, bills and collects over the Internet, and competes with big firms using just the merest fraction of their overhead costs. Best of all, she’s in control of her own time and her own life. She’s already heard from other solos who want to license her homegrown software application and launch similar VLOs.

Further north in Pittsburgh, we find the Delta Law Group, two lawyers who have created, if possible, an even more innovative virtual firm. New clients are met by a partner who videotapes the detailed first consultation and then outsources the file to one of several local solos and specialists. Like Kimbro’s firm, Delta provides its clients with a secure extranet to follow the progress of their matters and conducts its administrative tasks online. Delta profits from an extremely low overhead as well as from access to a range of talented lawyers in whatever field of expertise is required.

These virtual firms obviously have their limitations — for example, they can’t take on huge or complex matters — but today’s small practices have the same strictures, serve the same kinds of clients and take on the same typical matters. The difference is that these firms liberate their lawyers from the burden of overhead, empower their clients with access and choice, acquire clients hundreds of miles away, and hire talented lawyers only for the duration of a single file. Oh, and they can afford to charge very reasonable rates. None of it would be possible without the Internet, or without an openness by these lawyers to innovation.

Small, flexible, accessible, affordable, and turn-on-a-dimeable — that’s what tomorrow’s solo and small firms will look like. It seems that, in some quarters at least, tomorrow has arrived early.

Law firm size: past, present and future

After making an offhand comment in a previous post, that only about 10% of all Canadian lawyers were in large law firms, I began to wonder if that was, you know, accurate. So I checked the statistical breakdowns available at the Federation of Law Societies of Canada website and confirmed that yes, out of 79,147 active law society members at the end of 2006, 7,282 were in law firms with 51 or more lawyers, so the actual figure turns out to be closer to 9.2%.

But then, as often happens when I come too near a demographic breakdown, I became intrigued by a related issue: this time, the relative increase or decrease in large-firm membership over time.

Obviously, in the popular imagination, the last ten years have seen massive big-firm expansion, thanks mostly to steady growth by established players like McCarthys and Gowlings or mergers of smaller regional players into megafirms like BLG or Faskens. That perception has been aided by trade magazines like Lexpert that focused on the biggest firms (and a few high-profile urban boutiques) to the exclusion of other law practices. At the other end of the spectrum, we’ve also heard about the challenges facing sole practitioners and lawyers in smaller centers, the difficulties competing with title insurers and paralegals, and we would tend to expect that the day of the solo is ending.

Well, I ran the numbers and came up with a few charts that might be of interest. First of all, I compared types of private law practices in 1996 and 2006: Continue Reading